SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D. C. 20549



                                 FORM 10-KSB
                                  (Mark One)
           [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                      SECURITIES EXCHANGE ACT OF 1934



                     For the year ended December 31, 2007

                          Commission File No. 0-19047


                          FOOD TECHNOLOGY SERVICE, INC.
               (Exact name of Registrant as specified in its charter)

               FLORIDA                       59-2618503
 (State of Incorporation or Organization)   (Employer Identification Number)

            502 Prairie Mine Road, Mulberry, FL     33860
         (Address of Principal Executive Offices)  (Zip Code)

   Registrant's telephone number, including area code: (863)425-0039
   Securities registered pursuant to Section 12(b) of the Act: None
   Securities registered pursuant to Section 12(g) of the Act: Common Stock,
        $.01 par value



         Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

                     Yes                                   No
                     _x_                                   ___

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained herein, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB. [ ]

         The Registrant's operating revenues for its most recent fiscal year
were $2,092,826.

         As of March 28, 2008, 2,751,210 shares of the Registrant's Common
Stock were outstanding, and the aggregate market value of the voting stock
held by non-affiliates (2,017,882 shares) was approximately $4,116,479
based on the market price at that date.

                   DOCUMENTS INCORPORATED BY REFERENCE

         Proxy Statement for the Annual Meeting of Shareholders scheduled
to be held May 30, 2008.

                               TABLE OF CONTENTS

PART I

Item 1     Description of Business

Item 2     Description of Properties

Item 3     Legal Proceedings

Item 4     Submission of Matters to a Vote of Security Holders

PART II

Item 5     Market for Registrant's Common Equity and Related Stockholder
           Matters

Item 6     Management's Discussion and Analysis

Item 7     Financial Statements

Item 8     Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure

Item 8(a)  Controls and Procedures

PART III

Item 9     Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act

Item 10    Executive Compensation

Item 11    Security Ownership of Certain Beneficial Owners and Management and
           Related Stockholder Matters

Item 12    Certain Relationships and Related Transactions

Item 13    Exhibits and Reports on Form 8-K

Item 14    Principle Accounting Fees and Services


                                     PART I

Item 1.    Description of Business

     Food Technology Service, Inc., (the 'Company') was organized as a
Florida corporation on December 11, 1985. The Company owns and operates an
irradiation facility located in Mulberry, Florida that uses gamma radiation
to remove harmful pathogens and spoilage organisms from customer-owned
products. The Company provides contract sterilization services to the medical
device, food and consumer goods industries. The Company also irradiates
packaging, spices and ingredients. The Company's revenue for 2007 ($2,092,826)
resulted primarily from the processing of medical items and food. The Company
continues to diversify its customer base, however three customers accounted
for approximately 60% of revenues in 2007.

     During the past few years, the Company has aggressively pursued
sterilization of medical devices to increase its customer base. Medical device
manufacturing is expanding rapidly due to improvements in medical technology
and an aging population structure in the U.S. The Company is certified to
International Standards Organization (ISO) standards for radiation
sterilization of medical devices, which is especially important for potential
customers exporting medical products to the EU and Canada. Medical device
sterilization represented about 68% of revenues in 2007.

     Food irradiation is a proven technology that can prevent food-borne
illness or prevent the spread of insect pests. The process is supported by
the U.S. Department of Agriculture, the U.S. Food and Drug Administration,
the World Health Organization, the American Medical Association, the American
Dietetic Association and other governmental and scientific organizations. Food
irradiation is a developing segment of the irradiation industry and the
Company is well-positioned to take advantage of future growth in this area.
Food irradiation was responsible for about 21% of revenues in 2007.

     Although the Company focuses on medical sterilization and food
irradiation, the Company has and will continue to take advantage of profitable
opportunities to irradiate other products. In particular, the Company
irradiates packaging, cosmetic ingredients, horticultural items and consumer
goods. Such items accounted for about 11% of 2007 revenues.

Processing Plant Operations

Procedures

     Products to be irradiated are placed in a conveying system that moves the
items past a Cobalt 60 source at a rate that is dependent on the required
dose. The dose is also related to the density of the product and the strength
of the Cobalt 60 source. The actual dose received by a product is verified
through dosimeters placed on the product. The Company produces a detailed
record of the irradiation process for each product and maintains an extensive
quality assurance program. The process cannot make products radioactive just
as a dental x-ray does not make the patient's teeth radioactive.

Personnel

     As of December 31, 2007, the Company had thirteen employees.

Cobalt 60 Supply

     The level of radioactive energy of Cobalt 60 declines at approxiately 1%
per month, and new Cobalt 60 must be purchased at intervals to accommodate
this decrease in energy as well as customer growth. MDS Nordion is the
Company's supplier of Cobalt 60 and has agreed to accept the return of all
Cobalt 60 that has reached the end of its useful life. Cobalt 60 is available
from one other source. See "Agreements with MDS Nordion" below.

Plant Safety and Regulatory Matters

     Although a radiation source does require special handling, the necessary
precautions are implemented in regulations and practiced daily at the Company
and numerous other irradiation plants worldwide.  The Company's irradiation
processing activities do not produce harmful solid, liquid or gas effluents or
pollutants.  As a result of long experience in designing and operating similar
types of irradiation facilities, the necessary precautions for worker safety
in an irradiation facility are well regulated by the U.S. Nuclear Regulatory
Commission through the Florida Department of Health.  The Florida Department
of Health licenses the facility and inspects it on a regular basis.  The
facility is also inspected by the U.S. Department of Agriculture, the U.S.
Food and Drug Administration and the Florida Department of Agriculture and
Consumer Services.  The notified body for certification to ISO standards also
audits the facility regularly.

Agreements with MDS Nordion

     The Company, in September 1990, entered into an agreement with MDS
Nordion whereby MDS Nordion agreed to sell irradiation equipment and Cobalt
60 to the Company to operate its irradiation facility.  To secure payment of
the purchase price, the Company and MDS Nordion executed a Convertible
Debenture and Security Agreement, both dated January 15, 1992.  The balance
of the debt, including interest at December 31, 2007 was $777,726.

     On October 22, 1991 the Company entered into a Reimbursement and
Indemnity Agreement with MDS Nordion whereby MDS Nordion assisted the Company
in obtaining a surety bond in the sum of $600,000 in order to meet State of
Florida facility permit bonding requirements.  In connection therewith, the
Company agreed to reimburse MDS Nordion for any liability and expense which
MDS Nordion may sustain as a result of its commitments to the bond issuer and
secured such obligation under a Mortgage and Security Agreement dated October
22, 1991.  The bond continues to be in effect.

     By agreements dated March 6, 2001, April 17, 2001, May 18, 2001 and
November 20, 2001, the Company and MDS Nordion agreed and further confirmed
that the Debt and any future advances, including payment of guarantees or
indemnities to third parties made by MDS Nordion for the Company's benefit,
shall be convertible at MDS Nordion's option, at any time, into Common Stock
of the Company.  The applicable conversion rate is determined based on 70% of
the closing price of the Company's shares of Common Stock listed on NASDAQ,
on the last trade date prior to the exercise of the conversion right.  MDS
Nordion has waived its rights to convert interest accruing on the indebtedness
from February 5, 2000 through January 1, 2009.

     In addition to Cobalt 60 purchased from MDS Nordion, MDS Nordion has
stored an additional amount of Cobalt 60 at the Company's facility in
anticipation of the Company's future needs.  At the end of 2007, there were
approximately 1.2 million curies of Cobalt 60 both owned and stored at the
Company's facility. Title in and to 150,174 curies of Cobalt 60 located
at the facility remains the property of MDS Nordion and may be removed by MDS
Nordion at any time.

Item 2.    Description of Properties

     The Company's irradiation facility and executive office are located on an
approximately 2.17 acre site owned by the Company in Mulberry, Polk County,
Florida.  The Company purchased the site because of its convenient access to
State Road 60, a major transportation artery between Central Florida near the
major interstate systems.  The Company's irradiation facility and executive
office comprise approximately 28,800 square feet, including a 22,600 square
foot warehouse and loading and unloading area, a 3,200 square foot office
area, and a 3,000 square foot irradiation chamber and Cobalt 60 storage cell.
The Company's facility is designed to operate 24 hours per day, seven days per
week.  As of December 31, 2007, the Company had in use approximately 1.2
million curies of Cobalt 60.  The facility is licensed for a maximum of
4,500,000 curies of Cobalt 60 which allows production to be increased
significantly, if needed.

     During the fourth quarter of 2006, the Company completed construction of
an approximately 8,000 square foot warehouse on 2.17 acres of Company-owned
land adjacent to the processing facility.  The Company commenced leasing the
facility in December of 2006 to an existing customer under the terms of a
5-year lease.

     As indicated in Item 1, substantially all of the assets of the Company
are pledged as collateral against the obligation to MDS Nordion or as
collateral to Community First Credit Union for the warehouse loan.

Item 3.    Legal Proceedings

         None

Item 4.    Submission of Matters to a Vote of Security Holders

         None

                                  PART II

Item 5.    Market for Registrant's Common Equity and Related Stockholder
Matters

(a) The following table shows the range of closing bid prices for the
Company's Common Stock in the NASDAQ Small Cap market for the calendar
quarters indicated. The quotations represent prices in the over-the-counter
market between dealers in securities, do not include retail mark-up, markdown,
or commissions and do not necessarily represent actual transactions.


                                 BID PRICES*
                                 -----------

                        2006       High      Low
                        ----       ----      ---
                   First Quarter  $4.16     $ 3.00
                   Second Quarter  3.84       2.92
                   Third Quarter   3.94       2.96
                   Fourth Quarter  3.46       1.96

                        2007       High      Low
                        ----       ---       ---
                   First Quarter  $3.23     $2.14
                   Second Quarter  2.80      2.40
                   Third Quarter   2.86      2.05
                   Fourth Quarter  4.00      2.48

        *Reflects 1:4 Reverse Stock Split on July 3, 2006

(b) As of December 31, 2007, the approximate number of beneficial holders of
Common Stock of the Company was 3,500.

(c) The Company has paid no dividends to date and does not anticipate paying
any for the foreseeable future.

Item 6.     Management's Discussion and Analysis

Plan of Operations

     Food Technology Service, Inc. had revenue of $2,092,826 in 2007.  This is
an increase of 18% over 2006 revenue of $1,771,914.  The Company had net
income before taxes of $234,752 in 2007.  In 2006, the Company began
reflecting the value of tax-loss carry-forward credits on its financial
statements.  Assigning a value to those credits increased net income after
 taxes in 2006 by $650,000.  Discounting the impact of valuing the tax-loss
carry-forward credits, the Company had net income before taxes of $88,667 in
2006. Thus, net income for 2007 increased by approximately 265% over 2006.

     Management attributes increased revenue to a growing customer base that
requires irradiation of products on a regular basis. The majority of revenue
growth is occurring in medical sterilization but strong interest has developed
in food irradiation due to recent food recalls and illness outbreaks.  The
Company is actively seeking to diversify the customer base - in 2006 three
customers accounted for about 64% of revenues.  In 2007, those same three
customers accounted for approximately 60% of revenues.



     During 2007, processing costs as a percentage of sales were 25.1 percent
which compares favorably to 26.5 percent in 2006.  General administrative and
development costs as a percentage of sales during 2007 were 40.9 percent
compared to 42.9 percent in 2006.  The decline in processing costs and
general, administrative and development expenses, as a percentage of sales,
was due primarily to the increase in sales as such costs remained relatively
constant.

     In order to comply with SFAS 123R, the Company is reporting the value of
stock-options granted in 2007 as an item of expense.  These options have been
issued to Company employees, certain service providers and Board members and
were valued using the Black-Scholes option-pricing model.  This action
increased expenses in 2007 by $33,534.

     During the first quarter of 2007, the Company purchased and installed
Cobalt to replace Cobalt lost to normal deterioration and to expand production
capacity.  That purchase was paid by a combination of cash on hand and short-
term financing which was paid in full in 2007.  The Company also made a
payment of $100,000 during 2007 on long-term debt owed to MDS Nordion.

     Although there is no assurance, management anticipates continued
profitability during 2008 with revenues exceeding those in 2007.  The majority
of revenue increases are anticipated for the third and fourth quarters after
the Company installs additional Cobalt to increase capacity.  Management does
not anticipate any significant increases in actual processing costs or general
and administrative expenses during 2008.

Liquidity and Capital Resources

     At December 31, 2007, the Company had cash on hand of approximately
$257,286.  At December 31, 2007, the Company's outstanding debt to MDS Nordion
amounted to $777,726 which is evidenced by a Debenture and Security Agreement.
 The debt, which includes interest of $514,532 bears interest at prime plus
1%. Such debt is due and payable on demand.

Item 7.     Financial Statements

     Reference is made to the Company's Financial Statements included herewith.

Item 8.     Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

         None.


Item 8(a) Controls and Procedures

     The Company's principal executive officer and principal financial officer
evaluated the Company's disclosure controls and procedures (as defined in Rule
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended)
as of December 31, 2007 (the "Evaluation Date").  Based on that evaluation,
the principal executive officer and principal financial officer of the Company
concluded that, as of the Evaluation Date, the disclosure controls and
procedures, established by the Company, were adequate to ensure that
information required to be disclosed by the Company in reports that the
Company files under the Exchange Act, is recorded, processed, summarized and
reported on a timely basis in accordance with applicable rules and regulations.

     This annual report does not include an attestation report of the
Company's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by
the Company's registered public accounting firm pursuant to temporary rules of
the Securities and Exchange Commission that permit the Company to provide only
managements report in this annual report.

     This annual report does not include an attestation report of the
Company's registered public accounting firm regarding internal control over
Financial reporting. Management's report was not subject to attestation by the
Company's registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
managements report in this annual report.

     There were no changes in the internal controls over financial reporting
during the fourth quarter ended December 31, 2007 that have materially
affected, or is reasonably likely to materially affect, the Company's internal
controls over financial reporting.

                                   PART III

Item 9.    Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act

Directors and Executive Officers of the Company.

      Reference is made to the Company's Proxy Statement to be used in
conjunction with the 2008 Annual Shareholders Meeting scheduled to be held on
May 30, 2008.

Item 10.    Executive Compensation


     Reference is made to the Company's Proxy Statement to be used in
conjunction with the 2008 Annual Shareholders Meeting scheduled to be held on
May 30, 2008.

Item 11.    Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters

     Reference is made to the Company's Proxy Statement to be used in
conjunction with the 2008 Annual Shareholders Meeting scheduled to be held on
May 30, 2008.

Item 12.    Certain Relationships and Related Transactions

         See Item 1 Business -"Agreements with MDS Nordion."

Item 13.    Exhibits

(a)    Exhibits
       --------

(1)   Articles of Incorporation. Reference is made to Exhibit 3.1 included in
the Company's Registration Statement on Form S-18 (File No. 33-36838-A).
(2)   By-Laws. Reference is made to Exhibit 3.2 included in the Company's
Registration Statement on Form S-18 (File No. 33-36838-A).
(10)   Agreements entered into by the Company with MDS Nordion
*(a)   Reimbursement and Indemnity Agreement dated October 22, 1991
*(b)   Agreement dated December 11, 1991
*(c)   Debenture dated January 15, 1992
*(d)   Copy of Security & Mortgage Agreement dated January 15, 1992
*(e)   Financing Agreement dated February 21, 1992
*(f)   Security Agreement dated February 21, 1992
**(g)  Letter Agreement dated March 31, 1994 and April 13, 1994
***(h)  Modification Agreement
(14)   Code of Ethics****
(31)   Rule 13a-14(a)/15d-14(a) Certifications*****
(32)   Section 1350 Certification*****

*      Reference is made to Exhibit (c)(3) included in the Company's
       Form 10-KSB Report filed for the year ended December 31, 1991.

**     Reference is made to Exhibit 10(g) included in the Company's
       Form 10-KSB Report filed for the year ended December 31, 1994.

***    Reference is made to Exhibit 10(h) included in the Company's
       Form 10-KSB Report filed for the year ended December 31, 2000.

****   Reference is made to Exhibit 14 included in the Company's
       Form 10-KSB Report filed for the year ended December 31, 2003.

*****  Filed herewith.


Item 14.  Principle Accounting Fees and Services

     Reference is made to the Company's Proxy Statement to be used in
conjunction with the 2008 Annual Shareholders Meeting scheduled to be held on
May 30, 2008.

                                 SIGNATURES
                                 ----------

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized as of the 31st of
March 2008.

                                        FOOD TECHNOLOGY SERVICE, INC.
                                        By: /S/ Richard G. Hunter, Ph.D.
                                            ---------------------------
                                        Richard G. Hunter, Ph.D.
                                        Chief Executive Officer and
                                        Chief Financial Officer



         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated:

           Name                     Title                Date


 /S/ Richard G. Hunter, Ph.D.       Director           March 31, 2008
------------------------------
Richard G. Hunter, Ph.D.

 /S/ Samuel Bell                    Director           March 31, 2008
------------------------------
Samuel Bell

 /S/ John Corley                    Director           March 31, 2008
------------------------------
John Corley

 /S/ David Nicholds                 Director           March 31, 2008
------------------------------
David Nicholds

 /S/ John T. Sinnott                Director           March 31, 2008
------------------------------
John T. Sinnott, M.D., F.A.C.P

/S/ Ronald Thomas                   Director           March 31, 2008
------------------------------
Ronald Thomas










                       FOOD TECHNOLOGY SERVICE, INC.

                       INDEX TO FINANCIAL STATEMENTS


Report of Independent Registered Public Accounting Firm

Financial Statements:

Balance Sheets - December 31, 2007 and 2006

Statement of Operations - Years Ended December 31, 2007, 2006 and 2005

Statement of Stockholders' Equity - Years Ended December 31, 2007, 2006 and 2005

Statement of Cash Flows - Years Ended December 31, 2007, 2006 and 2005

Notes to Financial Statements





                  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
 and Stockholders
Food Technology Service, Inc.

     We have audited the accompanying balance sheet of Food Technology
Service, Inc. as of December 31, 2007 and 2006 and the related statements of
operations, stockholders' equity, and cash flows for each of the three years
in the period ended December 31, 2007.  These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Food Technology
Service, Inc. as of December 31, 2007 and 2006 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2007, in conformity with U.S. generally accepted accounting
principles.


FAIRCLOTH & ASSOCIATES, P.A.
Tampa, Florida
February 21, 2008


                        FOOD TECHNOLOGY SERVICE, INC.
                             BALANCE SHEET



                                                   December 31,
                                               2007               2006
                                               ----               ----


                                 ASSETS
                                 ------

Current Assets:

  Cash                                       $257,286          $425,110
  Accounts Receivable, Less Allowance
    for Doubtful Accounts of $2,500           337,414           362,684
  Prepaid Expenses                             28,269            27,852
                                             --------           -------

    Total Current Assets                      622,969           815,646
                                             --------           -------

Property and Equipment:

  Buildings                                 3,282,029         3,277,209
  Cobalt                                    3,900,496         3,100,973
  Furniture and Equipment                   1,799,621         1,792,601
  Less:  Accumulated Depreciation          (5,236,601)       (4,868,623)
                                           ----------        ----------
                                            3,745,545         3,302,160

Land                                          171,654           171,654
                                           ----------        ----------

   Total Property and Equipment             3,917,199         3,473,814
                                           ----------        ----------

Other Assets:

  Deferred Income Taxes                       650,000           650,000
  Utility Deposit                               5,000             5,000
  Loan Costs                                    9,143            11,429
                                           ----------        ----------

    Total Other Assets                        664,143           666,429
                                           ----------        ----------

    Total Assets                           $5,204,311        $4,955,889
                                           ----------        ----------



                     SEE NOTES TO FINANCIAL STATEMENTS




                      FOOD TECHNOLOGY SERVICE, INC.
                           BALANCE SHEET

                                                     December 31,
                                              2007                2006
                                              ----                ----

                 LIABILITIES AND STOCKHOLDERS' EQUITY
                 ------------------------------------
Current Liabilities
  Current Portion of Note Payable             $   9,033          $3,113
  Accounts Payable and Accrued Liabilities       68,334          80,855
  Financing Agreement Payable                   777,726         801,576
                                                -------         -------


    Total Current Liabilities                   855,093         885,544
                                                -------         -------


Note Payable After One Year                     235,681         246,787
                                                -------         -------


Total Liabilities                             1,090,774       1,132,331


Stockholders' Equity:


  Common Stock $.01 Par Value, Authorized
  5,000,000 Shares, Issued 2,756,364
  Shares in 2007 and in 2006                     27,564          27,564


  Paid-In Capital                            12,114,350      12,059,123
  Deficit                                    (8,009,886)     (8,244,638)
                                             ----------      -----------


                                              4,132,028       3,842,049


Less, 5,154 Treasury Shares at Cost             (18,491)        (18,491)
                                             ----------       ----------


      Total Stockholders' Equity              4,113,537       3,823,558
                                              ---------       ---------


Commitments and Contingencies
(Note H)

   Total Liabilities and Stockholders' Equity $5,204,311     $4,955,889
                                              ----------     ----------




                       SEE NOTES TO FINANCIAL STATEMENTS





                      FOOD TECHNOLOGY SERVICE, INC.
                        STATEMENT OF OPERATIONS

                                                       Year Ended

						       December 31,
                                         2005           2006            2007
                                         ----           ----            ----


Net Revenues                         $ 1,703,556     $1,771,914      $2,092,826
                                     -----------     ----------      ----------


Processing Costs                         441,897        469,443         524,256


Selling, General and Administrative      707,539        759,982         856,676


Depreciation                             366,241        389,568         368,152


Interest Expense                          49,030         64,254         108,990
                                       ----------     ----------      ----------


                                       1,564,707      1,683,247       1,858,074
                                       ---------      ---------       ----------


Income (Loss) before Income Taxes        138,849         88,667         234,752

Income Taxes

  Current                                 41,700         31,800          97,700
  Deferred Income Tax (Benefit)                        (650,000)
                                      ----------       ---------     ----------
         Total                            41,700       (618,200)         97,700


Income (Loss) before Benefit of
  Tax Loss Carryovers                     97,149        706,867         137,052


Benefit of Tax Loss Carryovers            41,700         31,800          97,700
                                      ----------     ----------      ----------


   Net Income                         $  138,849     $  738,667      $  234,752
                                      ----------     ----------      ----------


Net Income Per Common Share           $    0.050     $    0.268      $    0.085
                                      ----------     ----------      ----------






                      SEE NOTES TO FINANCIAL STATEMENTS











                             FOOD TECHNOLOGY SERVICE, INC.
                           STATEMENT OF STOCKHOLDERS' EQUITY


                                  Common      Paid-In                 Treasury
                                  Stock       Capital       Deficit     Stock
                                 --------    ---------     ---------  ---------

Balance, December 31, 2004       $  27,560  $12,058,027  $(9,122,154)

    Issuance of 500 Shares Upon
    Exercise of Stock Options            5        1,095


    Net Income for Year                                      138,849
                                 ---------   ----------   ----------


Balance, December 31, 2005          27,565    12,059,122  (8,983,305)


Purchase of 10,404 Treasury Shares                                     $18,491


Net Income for Year                                          738,667
                                 ---------   -----------  ----------  --------


Balance, December 31, 2006          27,565    12,059,122  (8,244,638)   18,491


Stock Option Expense                              55,227


    Net Income for Year                                      234,752
                                 ---------   -----------  ----------  --------
Balance, December 31, 2007      $   27,565   $12,114,349  $(8,009,886) $18,491
                                ----------   -----------  ----------- --------



                           SEE NOTES TO FINANCIAL STATEMENTS






                               FOOD TECHNOLOGY SERVICE, INC.
                                  STATEMENT OF CASH FLOWS



                                                Year Ended December 31,
                                           2005           2006         2007
                                           ----           ----         ----


Cash Flows from Operations:
  Cash Received from Customers         $  1,552,551  $  1,693,681  $2,116,497
Interest Paid                                            (3,314)    (32,839)
  Cash Paid for Operating Expenses       (1,124,462)   (1,174,668) (1,334,934)
                                       ------------   ------------  ----------
                                            428,089       515,699     748,724

Cash Flows from Investing:
  Purchase of Building, Equipment
  and Cobalt                               (24,906)      (846,729)   (811,363)
                                       ------------   -----------   ----------
                                           (24,906)      (846,729)   (811,363)

Cash Flows from Financing Activities:
  Proceeds from Borrowing                                 249,900
  Loan Costs Paid                          (11,429)
  Proceeds from Sale of Common Stock         1,100
  Purchase of Treasury Stock                              (18,491)
  Payment of Loans                        (100,000)                  (105,185)
                                       ------------   ------------   ---------


					  (110,329)        231,409   (105,185)

Net Increase (Decrease) in Cash            292,854         (99,621)  (167,824)


Cash at Beginning of Year                  231,877         524,731    425,110
                                        ----------    ------------   ---------


Cash at End of Year                     $  524,731    $    425,110   $ 257,286
                                        ----------    ------------   ---------


Reconciliation of Net Loss to
  Net Cash Provided (Used) by Operations:
  Net Income (Loss)                     $  138,849    $    738,667   $ 234,752


Adjustments to Reconcile
  Net Income (Loss) to Cash Provided or Used:
  Loan Cost Amortization                                                 2,286
  Deferred Income Taxes                                   (650,000)
  Depreciation                             366,241         389,568     368,152
  Non Cash Payments of Interest
  and Salaries                              78,842          67,834     131,203
  (Increase)Decrease in Receivables       (151,005)        (75,733)     25,270
  (Increase) Decrease in Prepaid
  Expenses                                 (15,392)         (6,903)       (417)
  Increase (Decrease) in Payables
  and Accruals                              10,554          52,266     (12,522)
                                         ---------       ---------   ----------


Net Cash Provided (Used) by
   Operating Activities                  $  428,089      $ 515,699   $ 748,724
                                         ----------      ---------   ---------


Supplemental schedule of non-cash investing and financing activities.


The Company converted $50,842, $67,834 and $76,151 of interest expense to debt
in 2005, 2006, and 2007 respectively.


Also receivables of $28,000 were forgiven for services in 2005.




                         SEE NOTES TO FINANCIAL STATEMENTS




                           FOOD TECHNOLOGY SERVICE, INC.


                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2007


Note A - Summary of Significant Accounting Policies:


A summary of the Company's significant accounting policies consistently
applied in the preparation of the accompanying financial statements follows:

1.  Nature of Business


The Company was organized in December 1985 and is engaged in the business of
operating a gamma irradiation facility using Cobalt 60 for the sterilization
of medical, surgical, pharmaceutical and packaging materials. It also
disinfects fruits, vegetables and meat products which extends their shelf
life.


2. Use of Estimates


Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. These estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing the financial statements.


3. Fair Value of Financial Instruments


The fair value of financial instruments has been valued at the prevailing
prime interest rate plus 1%. The fair value approximates the carrying amount
of debt.


4. Revenue Recognition


The primary source of revenue is from treating products with Cobalt. Net
Revenue is the gross income from such processing less returns and allowances,
if any. Revenues are recorded after the Company's performance obligation is
completed and product has been processed in accordance with the customer's
specifications and collection of the resulting receivable is probable. A
provision is made for doubtful accounts which historically have not been
significant.


5. Research and Development Costs


Research and development costs are charged to expense as incurred. Such costs
have not been significant to date.


6. Depreciation


Assets other than Cobalt have been depreciated using the straight-line method
over the following lives for both financial statement and tax purposes:


                Building                  31.5 years
                Furniture and Equipment   5-15 Years


The total cost basis of Cobalt has been depreciated using engineering
estimates from published tables under which one-half of the remaining value
is written off over 5.26 year periods.


Estimated useful lives are periodically reviewed and if warranted, changes
will be made resulting in acceleration of depreciation.





                       FOOD TECHNOLOGY SERVICE, INC.



                       NOTES TO FINANCIAL STATEMENTS
                            December 31, 2007
Note A - Summary of Significant Accounting Policies (continued):

7. Net Income Per Share


Basic net income per share is computed using the weighted average number of
common shares outstanding. Diluted earnings per share are not presented
because the result of using common stock equivalents in the computation is
antidilutive.


8. Comprehensive Income


The only component of comprehensive income the Company has is net income.


9. Stock Option Plans


The Company has various stock option plans for employees and other individuals
providing services to or serving as Directors of the Company. (See Note E)
Prior to 2006 the Company accounted for these plans under the recognition and
measurement principles of APB No. 25, and related interpretations.
Accordingly, compensation expense was recognized only when options were
granted at an exercise price below the market price at date of grant.

Effective January 1, 2006, the Company adopted the fair value recognition
provisions of SFAS 123R, using the prospective transition method and therefore
has not restated prior periods. Under this transition method, stock-based
compensation expense in 2006 included compensation expense for all share-based
payment awards granted prior to, but not yet vested as of, January 1, 2006,
based on the grant-date fair value estimated in accordance with the provisions
of the SFAS. The Company recognizes these compensation costs for shares
expected to vest on a straight-line basis over the requisite service period of
the award using the Black-Scholes option-pricing model.


Note B - Financing Agreement:


Convertible Financing Agreement to Nordion due
on demand plus interest at 1% over prime    $263,194

Non-convertible accrued interest             514,532
                                             -------
                                            $777,726
                                             -------


At December 31, 1999 the Company owed MDS Nordion, $378,598 (payable in
Canadian currency), $375,732 in cash advances and $200,146 in accrued interest
totaling $954,476. Such debt was all due January 5, 2001.


On March 6, 2000, as amended on May 18, 2000 the parties agreed to simplify
and consolidate the debt as follows. The total amount of the indebtedness at
February 4, 2000 was $963,194 in U.S. dollars, which included $22,114 accrued
interest. The parties further agreed that the payable debt, interest accruing
thereon, and any future advances remain, at Nordion's option, convertible at
any time into common shares of the Company at 70% of the market value at date
of conversion. Nordion has agreed to waive its rights to convert interest
accruing on the indebtedness from February 5, 2000 through January 1, 2009.



                          FOOD TECHNOLOGY SERVICE, INC.


                          NOTES TO FINANCIAL STATEMENTS
                               December 31, 2007



Note B - Financing Agreement (continued):



All assets of the Company (except for the warehouse and land mentioned in Note
C) collateralize all sums advanced by the supplier including accrued interest.



Note C - Note Payable and Related Lease Agreement:



On November 18, 2005 the Company entered into a loan agreement to borrow
$249,900 from a Credit Union. Such loan was funded during 2006 and the proceeds
 were used to construct a warehouse at the Company's existing facility. The
loan bears interest at 7.375%, payable $2,300 monthly including principal and
interest through June 2012, with a balloon payment of $196,606 on July 1, 2012.

The Note is collateralized by a mortgage on the property where the warehouse
is located and assignment of rental payments from a lease agreement entered
into with a major customer. Under the terms of the five year lease, monthly
rental payments of $3,333 commenced in December 2006. The tenant has an option
to renew the lease for five additional periods of one year each.



The note principal is payable as follows:



                               2008    $    9,033
                               2009        10,575
                               2010        11,382
                               2011        12,250
                               2012       201,474
                                        ---------


                                       $  244,714
                                        ---------


Note D - Income Taxes:



The Company has unused operating loss carry forwards available at December 31,
2007 of $7,469,012 for tax purposes and $7,487,742 for financial reporting
purposes. The loss carry forwards expire as follows:



                                            Amount
                                            ------


                         Year             Tax                Book
                         ----             ---                ----


                         2008         $ 1,297,455       $   945,703
                         2009           1,239,590         1,239,696
                         2010           1,262,386         1,292,314
                         2011           1,048,800         1,065,209
                         2012             688,497           983,017
                         2018             647,342           573,699
                         2019             840,410           881,875
                         2020              86,215           147,912
                         2022             256,356           256,356
                         2024             101,961           101,961
                                      -----------        ----------


                                      $ 7,469,012       $ 7,487,742
                                      -----------       -----------




                        FOOD TECHNOLOGY SERVICE, INC.
                        NOTES TO FINANCIAL STATEMENTS
                            December 31, 2007



Note D - Income Taxes (continued):

Deferred income taxes reflect the estimated tax effect of temporary
differences between assets and liabilities for financial reporting purposes
and those amounts as measured by tax laws and net operating losses. The
components of deferred income tax assets and liabilities at December 31, 2007
and 2006 were as follows:



                                             2007        2006
                                             ----        ----
   Net operating loss carry forwards     $2,817,000   $3,284,484
                                          ---------   ----------


    Net deferred tax assets              2,817,000    3,284,484
     Less - Reserve                      (2,167,000)  (2,634,484)
                                          ---------   ----------


   Deferred Benefit                      $  650,000   $  650,000
                                         ----------   ----------


As of December 31, 2005, the Company fully reserved its deferred tax asset
because it could not demonstrate that it would have the future taxable income
necessary to realize that asset. During 2006, as a result of the continuing
diversification and growth in customer base, ongoing profits from operations
and the Company's revised estimate of future taxable income, it was concluded
that it is more likely than not that future taxable income will be sufficient
to realize a portion of the Company's deferred asset. Accordingly, $650,000 of
the reserve was reversed as a credit to income tax expense during 2006. No
adjustments were necessary in 2007.

The Company believes that its estimate of future operations is conservative
and reasonable, but inherently uncertain. Accordingly, if future operations
generate taxable income greater than the projections further adjustments to
reduce the reserve are possible. Conversely, if the Company realizes
unforeseen material losses in the future and its future projections of income
decrease the reserve could be increased resulting in a charge to income.



Note E - Stock Options:



On June 23, 2000 the Stockholders approved the 2000 Incentive and Non-
Statutory Stock Option Plan (the "2000 Plan").



The Plan is administered by the Board of Directors who is authorized to grant
incentive stock options ("ISO's") or non-statutory options ("NSO's"), to
Officers and employees of the Company and for certain other individuals
providing services to or serving as Directors of the Company.



The maximum number of shares of the Company's Stock that may be issued under
the 2000 Plan is 125,000 shares. Options under this plan were granted as
follows:



                           2002     5,000
                           2003    15,000
                           2004      None
                           2005     4,750
                           2006   100,250
                                  -------


                                  125,000
                                  -------


The aggregate fair market value (determined at the time an ISO is granted) of
the Common Stock with respect to which ISO's are exercisable for the first
time by any person during any calendar year under the Plans shall not exceed
$100,000. Any option granted in excess of the foregoing limitation shall be
specifically designated as being a NSO.



                            FOOD TECHNOLOGY SERVICE, INC.
                            NOTES TO FINANCIAL STATEMENTS


                               December 31, 2006



Note E -Stock Options (continued):



The options are exercisable 20% of the authorized amount immediately and 20%
in each of the following four years. ISO's and NSO's granted to an optionee
terminate 30 to 90 days after termination of employment or other relationship,
except that ISO's and NSO's terminate the earlier of the expiration date of
the option, or 90 to 180 days in the event of death and 180 days to one year
in the event of disability.



On February 9, 1999 the Board of Directors approved an option plan for non-
employee Directors.



Such plan, as amended on May 18, 2000, grants options to Directors on the date
a Director is elected at the average quoted market price for the five days
preceding the date of grant. Such options may be exercised after one year. The
plan was further amended on March 1, 2001 to grant each non-employee Director
options to purchase 1,500 shares annually at the market value on the date of
grant and effective May 2005 the Chairman is awarded options for an additional
2,500 shares annually.



Shares were granted to Directors under this plan as follows:



                                 Year      Shares     Per Share
                                 ----      ------     ---------


                                 2005       7,000       $4.12
                                 2006      10,000       $3.28
                                 2007      10,000       $2.52



Changes that occurred in options outstanding are summarized below:



                          2007               2006               2005
                          ----               ----               ----
                         Average            Average            Average
                        Exercise            Exercise           Exercise
                 Shares   Price     Shares   Price   Shares     Price
                 ------   -----     ------   -----   ------     -----



Outstanding
at beginning
of year         147,500   $3.20     61,250   $4.88   62,714     $5.80


Granted          30,000   $2.55    112,500   $3.25   11,750     $4.12

Exercised           --      --          --      --     (500)    $2.20

Expired/canceled (6,250)  $2.07    (26,250)  $2.16  (12,714)    $8.64

Outstanding at
end of year     171,250   $3.26    147,500   $3.20   61,250     $4.88


Exercisable at
end of year      58,750   $3.62     30,750   $4.08   39,500     $5.20

As mentioned in Note A, effective January 1, 2006, the Company adopted the
fair value recognition provisions of SFAS 123R. As a result, additional
compensation expense of $21,693 and $33,534 was recorded in 2006 and 2007
respectively. An additional $92,795 could be recorded over the remaining
vesting period of 56 months. The Company used the following assumptions in
applying the Black-Scholes pricing method:



           Risk free interest rate    4.95%
           Expected Volatility          30%
           Expected Life           5 years
           Dividend Yield                0%




                        FOOD TECHNOLOGY SERVICE, INC.
                       NOTES TO FINANCIAL STATEMENTS
                             December 31, 2007



Note F - Related Party Transactions:

The Company's supplier of Cobalt and major creditor, MDS Nordion owns
approximately 25.86% of the Company's outstanding common stock (see Note B
for financing arrangements).



The Company has recently purchased the following Cobalt from MDS Nordion:



                Year         Curies           Amount
                ----         ------           ------


                2006         195,139         $394,839
                2007         384,065          799,523



The President of the Credit Union which funded the Company's warehouse
loan was a Director of the Company. (see Note C)



Note G - Concentration and Credit Risk:



Although the Company continues to diversify its customer base, three
customers accounted for approximately 60% of revenues in 2007.



The Company's cash and accounts receivable are subject to potential credit
risk. Management continuously monitors the credit standing of the financial
institutions and customers with which the Company deals. A provision has been
made for doubtful accounts which historically have not been significant.



Note H - Commitments and Contingencies:



On March 11, 2006 the Board of Directors extended the President's employment
contract for five years commencing September 1, 2006 at an annual salary of
$110,000 plus options to purchase 100,000 shares of the Company's common stock
at $3.24 per share over a five year period.